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Rajyam Pictures Vs. Addl. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 396 of 1974 (Reference No. 209 of 1974)
Judge
Reported in[1978]114ITR847(Mad)
ActsIncome Tax Act, 1961 - Sections 246
AppellantRajyam Pictures
RespondentAddl. Commissioner of Income-tax
Appellant AdvocateS.V. Subramaniam, Adv. for ;Subbaraya Aiyer, Padmanabhan and Ramamani
Respondent AdvocateNalini Chidambaram, Adv.
Cases ReferredK. B. Stores v. Commissioner
Excerpt:
- - [1975]100itr603(guj) as well as by the gauhati high court in k. has expressed the view that where the imposition of penal interest is dependent upon the amount of income and the tax determined in dispute and the assessee had appealed from the order of assessment, he could challenge the imposition of interest as well in that appeal......of the income-tux act, 1961, was in these terms:'139. return of income.--(1) every person, if his total income or the total income of any other person in respect of which he is assessable under this act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed-- (a) in the case of every person whose total income, or the total income of any other person in respect of which he is assessable under this act, includes any income from business or profession, before the expiry of six months from the end of the previous year or where there is.....
Judgment:

Govtndan Nair, C.J.

1. The question referred to us for our opinion relating to the assessment years 1965-66 and 1966-67 is formulated thus :

'Whether the appeals preferred by the assessee to the Appellate Assistant Commissioner against the charging of interest under Section 139 for the assessment years 1965-66 and 1966-67 were competent?'

2. At the relevant time, Section 139(1) of the Income-tux Act, 1961, was in these terms:

'139. Return of income.--(1) Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed--

(a) in the case of every person whose total income, or the total income of any other person in respect of which he is assessable under this Act, includes any income from business or profession, before the expiry of six months from the end of the previous year or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year, or before the 30th day of June of the assessment year, whichever is later ;

(b) in the case of every other person, before the 30th day of June of the assessment year ;

Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return--

(i) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired on or before the 31st day of December of the year immediately preceding the assessment year, and in the case of any person referred to in Clause (b), up to a period not extending beyond the 30th day of September of the assessment year without charging any interest;

(ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest; and

'(iii) up to any period falling beyond the dates mentioned in Clauses (i) and (ii), in which case, interest at nine per cent, per annum shall be payable from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return --

(a) in the case of a registered firm or an unregistered firm which has been assessed under Clause (b) of Section 183, on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm ; and

(b) in any other case, on the amount of tax payable on the total income, reduced by the advance tax, if any, paid or by any tax deducted at source, as the case may be.'

3. Section 246 in Chapter XX provided for an appeal to the Appellate Assistant Commissioner and we are concerned here with Section 246(c) which is as follows:

'246. Appealable orders --Any assessee aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order-...

(c) an order against the assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed.'

4. The only part of Section 246(c) on which the learned counsel for the assessee laid emphasis is the earlier part of it speaking of 'an order against the assessee where the assessee denies his liability to be assessed'. It was suggested that the imposition of interest for the belated filing of the return, which was the case here, amounted to an order against the assessee and the assessee had denied its liability to be assessed under the Act. This argument supposes that the order directing payment of penal interest is an order under the Act and which order must necessarily, in the context, mean an order of assessment. It is difficult to accept this submission that the order imposing penal interest is an order of assessment. The only decision which is brought to our notice taking this view is by the Karnataka High Court in National Products v. Commissioner of Income-tax : [1977]108ITR935(KAR) . With great respect, we are unable to agree with the view expressed therein. The matter has been dealt with by the Gujarat High Court in Commissioner of Income-tax v. Sharma Construction Co. : [1975]100ITR603(Guj) as well as by the Gauhati High Court in K. B. Stores v. Commissioner oj Income-tax . The Gujarat High Court has referred to the earlier decision of the Bombay High Court in Commissioner of Income-tax v. Jagdish Prasad Ramnath : [1955]27ITR192(Bom) , where Chagla CJ. has expressed the view that where the imposition of penal interest is dependent upon the amount of income and the tax determined in dispute and the assessee had appealed from the order of assessment, he could challenge the imposition of interest as well in that appeal. But the decision is also authority for the proposition that no appeal will lie merely from an order imposing penal interest under Section 139. We respectfully follow the reasoning in this judgment on the facts of this case as no appeal has been preferred against the assessment order as such. Appeals were taken only from the order imposing penal interest. In fact, the assessee had not questioned the imposition of tax. The only matter sought to be agitated is against the imposition of penal interest. We, therefore, hold that no appeal will lie against such imposition of penal interest alone under Section 246(c) of the Income-tax Act. We, accordingly, answer the question referred to us in the negative and against the assessee and in favour of the revenue. The revenue will be entitled to its costs of this reference including counsel's fee of Rs. 500.


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